BoE's Pill questions if QE is best tool to tackle market dysfunction

A man stands outside the Bank of England in the City of London, Britain April 19, 2017. REUTERS/Hannah McKay

LONDON, April 7 (Reuters) - Quantitative easing may be the wrong tool to tackle any future episodes of bond market turmoil, especially given how high inflation is now, Bank of England Chief Economist Huw Pill said on Thursday.

Opening a BoE conference on sovereign capital markets research, Pill said the central bank might not want to repeat the hundreds of billions of pounds of additional bond purchases announced in March 2020 at the start of the COVID-19 pandemic, which were made partly to calm bond market turmoil.

"Maybe we were just lucky to confront these challenges at a time when macroeconomic and monetary considerations did not conflict with efforts to support market functioning and underpin financial stability," he said.

"Now that inflation is much higher, and threatening to go higher still, that can no longer be taken for granted," Pill added.

"Some of the papers to be presented here ... give reason to question whether monetary policy is the appropriate tool to address these sovereign market functioning concerns."

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Reporting by David Milliken Editing by William Schomberg

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